Certified Government Financial Manager (CGFM) Practice Exam 2026 - Free CGFM Practice Questions and Study Guide

Formula grants are designed to provide financial assistance based on a specific formula established by legislation or regulation. The nature of these grants means that program guidelines play a crucial role in determining the funding allocation. If the basic eligibility criteria set forth in those guidelines are met, the amount transferred from the grantor to the grantee is automatically calculated according to the predetermined formula. This makes it predictable and equitable for eligible recipients, ensuring that funding is distributed based on objective criteria rather than subjective decisions.

In contrast, options regarding funding for narrowly defined purposes or limited duration characterize other types of grants. While categorical grants focus on specific issues and needs, block grants offer broader funding without stringent requirements on how to spend the money. Additionally, formula grants are not restricted solely to healthcare and public safety, as they apply to various fields and sectors, reflecting the diverse needs of different agencies or organizations receiving the grants. Thus, the accurate representation lies in option C, which captures the essence of formula grants and their operational mechanics.